The Bailout Negotiated

It's no wonder that Democrats (specifically Harry Reid and Chris Dodd) were so angry at McCain for inserting himself in the bailout deal. Reid said that McCain hurt the process. McCain did hurt the process and thank God for that. Because the process needed to stopped in it's tracks. The Democrats were trying to ram sweet deals for themselves down the throat of Republicans (read about the concessions below).

John Boehner, the Republican Minority Leader for the House of Representatives said yesterday that if it hadn't been for McCain the Democrats would have run over him "like a freight train" and kept him from putting more taxpayer protections in the bill

McCain is sorta known for ticking off the most conservative of Republicans, but this time he stood up for them in negotiations that they had no control over.

What is clear to me is that there was no way Pelosi and Dodd were going to get enough Republican support for this bill to make it bi-partisan without McCain stepping in and making conservative's like Republican leader John Boehner (who had called the bailout a "crap sandwich) happy enough to encourage other Republican members to vote yes.

Here are the details at Time Magazine:

The 106-page bill gives Paulson the $700 billion he requested in a three-page proposal 10 days ago but divvies the money up: $250 billion immediately, another $100 billion upon request of the President; the rest, if and when it is needed, will require the approval of Congress. And the money comes with strings. Paulson must report back to Congress more often and transactions must be posted online within two days. The House is expected to take up the bill on Monday and the Senate aims to pass it by Wednesday.

Once the bill is signed into law, Paulson has many options open to him on how unclog the credit markets, which Senator Judd Gregg, the top negotiator on the bill for Senate Republicans, described as a massive car accident in the middle of the highway. The government must clear the accident away by buying the toxic debt so that normal traffic can flow freely. One avenue will be to do a reverse auction, where banks compete to sell the Treasury their bad paper, with the Treasury choosing the lowest offers. The Treasury may also directly negotiate with companies, though no one knows exactly how that will work.

After their McCain-backed White House rebellion last week, House Republicans won a few concessions in the compromise: they had funding for a controversial housing program taken out and a bankruptcy provision that they argued was a giveaway to trial lawyers removed. They also got the Treasury Department to establish a federally backed insurance program for the debt — an alternative solution that is easier on the taxpayers but more expensive for the already cash-strapped banks — though the Treasury would not be required to actually use the program and Paulson has expressed opposition to such a route.

The issue of executive compensation nearly blew up the bill in the final talks that for some staff went well past 3:30 a.m. Sunday morning. But a compromise was reached that places a tax on executive salaries and bonuses of $500,000 or more at companies where the Treasury has bought more than $300 million in assets at auction. For companies where the Treasury intervenes directly, a 20% surcharge on "golden parachutes" is instituted.

It was a strange situation where McCain went up against Pelosi and the Democrats AND the President.

Personally I find this bill to be "the crap sandwich" Boehner referred to. The government created this problem and now the government is suppose to solve it? No thanks. But the pressure is too great, so I think they will get the bi-partisan support they need.

I haven't looked at my 401K or investments. It would be too depressing.

There really aren't any winners here. None. We all lose.